April 2, 2007

The AP/Atlanta Journal-Constitution on Monday examined how, with "billions of dollars at stake, nursing homes across the nation are rushing to reinvent themselves to compete with hospitals and affiliated rehabilitation facilities for short-term, higher-paying patients."

The nursing home industry for decades has focused on older, sicker patients. However, the "prospect of bigger payments" from treating younger patients by offering postoperative rehabilitation services at lower costs has spurred interest within the industry, according to the AP/Journal-Constitution.

Meanwhile, insurers and managed-care facilities are seeking less costly alternatives for post-surgery care, and Medicare has enacted stricter guidelines limiting the number of enrollees who can receive care at rehabilitation hospitals. Medicare estimates that nursing homes can offer rehabilitation for knee and hip replacements for one-third to one-half the cost of rehabilitation hospitals.

The nursing home industry says that it can provide less costly care because of lower overhead costs. Nursing homes have spent "millions of dollars on renovations and additions and new features like aromatherapy, brightly colored decor, spacious therapy gyms and Internet cafes to try to create a new, warmer, less institutional image," the AP/Journal-Constitution reports.

Critics maintain that nursing homes cannot provide quality rehabilitative care compared with hospitals. According to the AP/Journal-Constitution, the "moves by the nursing home industry represent yet another assault on the hospital industry, which has seen other competitors, such as surgery centers, also siphon off some of its best-paying customers"

Source: AP/Atlanta Journal-Constitution.